So a couple of days ago, I discussed Ronald Reagan and the economy because many Americans are under the impression that life was better under Reagan. I discussed real GDP per capita per year and found that Ronald Reagan wasn’t the best, nor even the second best. He was the third best president if we look at this economic indicator. So, today, I would like to get into something a little more personal than the GDP. Let’s look at real income.
Real median income is median income adjusted for inflation.
Just from the naked eye, we can see that it looks as if real median income took off during the Kennedy/Johnson administrations. Americans also did well during the Clinton and Reagan administrations. Again, if we look at real median income per capita per year, we come up with exactly what the naked eye is seeing in the above graph. John F. Kennedy/ London Baines Johnson came in first with 3.48 percent per year. Bill Clinton came in second with 2.49% per year. Finally, Reagan came in third with 2.45% per year.
So with these two real world measures of the economy, Reagan doesn’t come in first or second. He was the third best president in the last 50 years with regards to economic performance. Third. (Check some more facts in the book Presimetrics.)
Contrary to the predictions of supply-side proponents, the 1981 tax cuts did not lead to better economic performance. Economists generally measure performance from one business cycle peak to the next. The last three peaks occurred in 1979, 1989, and 2000. It is instructive to compare the performance of investment, productivity, and output in the 1979-89 cycle, which was influenced by the 1981 tax cuts, with the 1989-2000 cycle, which was little affected by those cuts.
Click on graph for larger version
Warren Buffett has been saying this for years. He was on This Week and repeated that we needed to raise taxes on the rich.
“I think that people at the high end, people like myself, should be paying a lot more in taxes. We have it better than we’ve ever had it,” he told ABC’s Christiane Amanpour in a clip played on “This Week” on Sunday.
When Amanpour pointed to critics’ claims that the very wealthy need tax cuts to spur business and capitalism, Buffett replied, “The rich are always going to say that, you know, ‘Just give us more money, and we’ll go out and spend more, and then it will all trickle down to the rest of you.’ But that has not worked the last 10 years, and I hope the American public is catching on.”